Correlation Between Cardinal Health and NORDHEALTH
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and NORDHEALTH at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cardinal Health and NORDHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and NORDHEALTH AS NK, you can compare the effects of market volatilities on Cardinal Health and NORDHEALTH and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cardinal Health with a short position of NORDHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and NORDHEALTH.
Diversification Opportunities for Cardinal Health and NORDHEALTH
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cardinal and NORDHEALTH is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and NORDHEALTH AS NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDHEALTH AS NK and Cardinal Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cardinal Health are associated (or correlated) with NORDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDHEALTH AS NK has no effect on the direction of Cardinal Health i.e., Cardinal Health and NORDHEALTH go up and down completely randomly.
Pair Corralation between Cardinal Health and NORDHEALTH
Assuming the 90 days horizon Cardinal Health is expected to generate 2.01 times less return on investment than NORDHEALTH. But when comparing it to its historical volatility, Cardinal Health is 1.95 times less risky than NORDHEALTH. It trades about 0.14 of its potential returns per unit of risk. NORDHEALTH AS NK is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 268.00 in NORDHEALTH AS NK on August 24, 2024 and sell it today you would earn a total of 39.00 from holding NORDHEALTH AS NK or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. NORDHEALTH AS NK
Performance |
| Timeline |
| Cardinal Health |
| NORDHEALTH AS NK |
Cardinal Health and NORDHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and NORDHEALTH
The main advantage of trading using opposite Cardinal Health and NORDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, NORDHEALTH can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NORDHEALTH will offset losses from the drop in NORDHEALTH's long position.| Cardinal Health vs. Shanghai Pharmaceuticals Holding | Cardinal Health vs. Sinopharm Group Co | Cardinal Health vs. Superior Plus Corp | Cardinal Health vs. NMI Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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